House prices flat in 2012 ... and they'll be flat again in 2013, says Halifax

Property values increased by an average of 1.3 per cent last month but are likely to end 2013 at levels close to where they began, Halifax said in its house price index this morning.

The bank reported an average house price of £163,845, up from £161,795 in November. Over the course of the year, values have remained little changed with six monthly rises and six decreases month-on-month.

Looking forward, Halifax predicts 2013 will once again be flat for house prices with ‘broad stability’ in the market. It believes property values are likely to end the year at levels close to where they began.

House prices 2012: December was a strong showing compared to other months of the year

Figures measured on a quarterly basis
are up 0.6 per cent, the first time this has been positive in seven
months amid signs of a firming in the housing market towards the end of
2012.

Prices in the three months to December were 0.3 per cent lower than in the last quarter of 2011, the smallest annual decline since May.

Halifax economist Martin Ellis, said: ‘Overall, last year saw an even mix of monthly rises and falls as prices lacked any real direction as both demand and supply pressures remained largely unchanged during 2012.

‘On an annual basis, prices in the final quarter of 2012 were marginally lower than in the last three months of 2011.’

Jonathan Samuels, chief executive of Dragonfly Property Finance, said: 'There was certainly a strengthening in the property market in the latter stages of 2013, although why is anyone's guess.

'Product competition among lenders and better rates due to the Funding for Lending Scheme, and the more stable jobs environment may be drivers.

'I wouldn't read too much into December's strong showing. Prices have been volatile for some time now, due to low transaction levels.'

House prices 2012: December was a strong showing compared to other months of the year

Topsy-turvy year for house prices

Nationwide's house price index last week said prices fell by one per cent over 2012, reversing a one per cent rise recorded in 2011, and it expects them to stay at similar levels or to drift 'modestly lower' during 2013.

The average property price in Britain is £162,262 according to the Nationwide report, with the North-South property gap continuing to widen.

But official figures from the Land Registry showed that values edged up 0.9 per annually but sales slowed.

A separate report from Halifax released over the Christmas period revealed property prices in Southend in Essex rose as much as 14.8 per cent over the past year – the biggest leap of any major UK town or city.

According to economists, house values in Britain are artificially high. Of a host of experts polled by the Financial Times, 44 said houses were overvalued compared to 26 who said they are not – yet despite this few of them expect any sharp falls this year.

At the same time, a report by estate agent Knight Frank said the price of the average home peaked at £183,959 in 2007 but has fallen so dramatically it will not return to this level until 2019.

The average house price in Britain is £162,262, Nationwide said last week

Mortgages becoming more widely available

Mortgages are becoming more widely available, thanks in part to the Funding for Lending Scheme in a signal that efforts to free up credit appear to be working.

The £80billion Government scheme, launched in August to boost the flow of credit to households and businesses, has resulted in a raft of new mortgage products being available and providers offering lower rates.

And for those struggling to get on the housing ladder, the Credit Conditions Survey released last week found that banks and building societies have increased lending to borrowers with smaller deposits, and are planning to increase their maximum loan-to-values.